The Elasticity of Tax Compliance: Evidence from a Low-Capacity State
Compliance is a key challenge for low-capacity states seeking to expand their tax base. A first order question that remains largely unanswered in the developing world context is: What is the elasticity of tax compliance with respect to the marginal tax rate? We will generate experimental evidence on this question by randomly distributing coupons that lower certain households’ property tax liability in the context of a tax collection campaign in the city of Kananga, Democratic Republic of Congo. The effects of the program on bribery will also be examined.